127: Grayscale vs. SEC, Instacart & Klaviyo IPOs, How Stock Exchanges Work, TikTok’s Spotify Competitor
Aug 30, 2023
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Grayscale vs. SEC court ruling for GBTC conversion into ETF. Instacart's advertising tactics, strategies of supermarket chains. Valuation and IPO prospects of a profitable business. Evolution and influence of stock exchanges. TikTok Music's potential impact on the music industry. Nostalgic conversation about childhood TV shows and books.
Instacart's success in the online grocery delivery market highlights the power of targeted advertising using first-party data.
Stock exchanges have become more powerful than banks due to their control of the derivatives market and their influence in indexation.
Twitter's acquisition of a license to provide virtual asset-related services signifies its entry into the cryptocurrency space and the growing integration of cryptocurrencies into mainstream platforms.
Deep dives
Instacart's Revenue Model and Success
Instacart, an online delivery platform for groceries, has turned profitable and is a dominant player in the market. They have implemented a successful revenue model by adding a margin on top of grocery items, along with delivery fees and tips. Approximately 30-40% of their revenue comes from advertising. Instacart utilizes first-party data collected from customers to target advertising, similar to how grocery stores promote brands within their physical stores. With the IPO valuation estimated to be around $13 billion, Instacart's success highlights the growing demand for online grocery delivery services and the power of targeted advertising using first-party data.
The Rise of Exchange Businesses
Stock exchanges have seen significant consolidation over the past decade, resulting in a small number of giant exchanges that dominate the industry. These exchanges have become more powerful than banks due to two key factors. Firstly, they have taken control of the derivatives market by acting as clearing houses, setting the rules and collaterals for derivative deals. Secondly, they have become key players in indexation, creating and managing indices that track various markets. The decisions made by these exchanges, such as which companies to include or exclude from indices, can have a massive impact on stock prices, making them highly influential. These developments have cemented their power and influence in the financial industry.
Twitter Acquires License for Crypto Payments
Twitter has acquired a license from Rhode Island to provide virtual asset-related services, including crypto payments. This license enables Twitter to store, transfer, and exchange digital assets. The move signifies Twitter's entry into the cryptocurrency space and its plans to offer crypto payment options on its platform. This development further demonstrates the growing adoption and integration of cryptocurrencies into mainstream platforms and establishes Twitter as a player in the evolving crypto industry.
Importance of listing on US stock exchanges for liquidity
Listing on US stock exchanges, such as the NYSE or NASDAQ, provides companies with access to deep and liquid markets. This is because the United States has a larger capital base and more active investors. The liquidity and depth of these markets make them attractive to companies looking to raise capital and attract a wide range of market participants. As a result, many companies, especially the largest IPOs, choose to list on US stock exchanges to maximize exposure and trading activity.
TikTok's entry into the music industry and its impact on Spotify
TikTok's foray into the music industry is a significant move that positions it as a kingmaker in the industry. With its massive user base of 1.7 billion monthly active users, it has become a powerful platform for discovering and promoting music. By integrating music into its platform and leveraging its algorithmic power, TikTok provides a unique opportunity for songs to go viral and gain widespread popularity. This poses a challenge for platforms like Spotify, which have established themselves as the go-to music streaming service. However, it remains to be seen how TikTok's entry will impact Spotify's market share, as Spotify's experience and early market presence still give it a strong competitive advantage.
The NIA boys discuss Grayscale vs. SEC, Instacart & Klaviyo IPOs, How Stock Exchanges Work, TikTok’s Spotify Competitor & much more
Timestamps:
(00:00:00) - Intro
(00:03:16) - Grayscale vs. SEC
(00:08:25) - IPO Window Open?
(00:13:09) - First Party Data Explained
(00:15:40) - Instacart Breakdown
(00:27:26) - Klaviyo Breakdown
(00:38:32) - How Stock Exchanges Work
(00:51:39) - Why Stock Exchanges are the New Power Brokers
(00:59:57) - TikTok’s Spotify Competitor
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